Posting as a Gross Amount
To post an invoice as a gross amount, a document type that defines posting as a gross amount must be entered on the initial screen into the field Document type. In the standard system, this is document type RE.
When you post the invoice, the cash discount amount is first ignored. Only later when the payment program is run by the Financial Accounting department is the cash discount amount credited to the account "non-operating result" and debited to the vendor account. The input tax account is also adjusted accordingly.
The following example shows how to post an invoice as a gross amount.
If an invoice contains a cash discount and taxes, more tax is posted with the invoice than should be, as the cash discount is not taken into account. This happens regardless of whether the invoice is posted as a gross or as a net amount. Upon payment by Accounting, the tax amount is adjusted automatically, i.e. the tax amount for the cash discount is credited to the input tax account.
In the example above, the input tax account is debited with $15 when the invoice is posted. However, only $95 (100 - 5%) is to be taxed. Therefore, the tax to be paid is 15% of $95 = $14.25. The difference of $0.75 is credited to the input tax account when the invoice is paid.